Rep. Oxley's comments came during a discussion of the proposed State Modernization and Regulatory Transparency (SMART) Act at the recent Property Casualty Insurers Association of America annual meeting in Chicago.

Rep. Oxley–who announced last week that he would retire when his term ends in January 2007–portrayed SMART as a middle-of-the-road measure that avoids a federal takeover. He said the bill–which sets federal standards for state regulation–would cut red tape and foster competition.

He noted that although this year's trio of hurricanes changed the agenda in Congress, the SMART Act is still a priority for his panel. "Despite what you may have heard about SMART, it is not the end of state-based insurance regulation," he said. "Those are scare tactics coming from people who have, they think, something to lose."

He added that, "in fact, SMART builds on existing state regulatory reform and does not create an optional federal charter or federal regulator."

Rep. Oxley said two major political obstacles are impacting SMART–the first being how much federal involvement there should be, with several powerful industry groups continuing to push for an optional federal charter.

"State groups want no federal presence," he said. "SMART takes the compromise position. It does not create a federal charter or regulator, but requires uniformity in several key areas such as agent and company licensing, market conduct and surplus lines."

The second political issue, he said, is competitive pricing, noting that insurance is the only financial services sector subject to state price controls.

"In the era of federal deregulation of the financial services industry, providing more competition and the like, your industry is the only one that faces price controls," he said. "Competitive pricing and the elimination of price controls will bring more choices and lower prices for consumers over time."

Rep. Oxley said that during hearings on the bill, "almost every witness that appeared before our committee testified about the glaring need for reforms, including many of the NAIC's recent leaders."

He noted that as South Carolina insurance commissioner, PCI's president, Ernst Csiszar, had been a proponent of SMART. Mr. Csiszar was also president of the National Association of Insurance Commissioners when he left to head up PCI.

Rep. Oxley said that since Mr. Csiszar's departure, the NAIC has recently been openly critical of SMART, but has not offered a reasonable alternative "other than the status quo–the status quo is not acceptable." He said NAIC and the states have not been successful in implementing uniform reforms and that "critical problems continue to persist."

Rep. Oxley said a bill creating SMART will be introduced once a redraft has been completed, noting that "the process has been slowed by our intense focus on the hurricane issues and response to Hurricane Katrina."

Quotebox, with mug:

"Despite what you may have heard about SMART, it is not the end of state-based insurance regulation. Those are scare tactics coming from people who have, they think, something to lose."

Rep. Michael Oxley, R-Ohio